February 7, 2002

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“I see Native people dying every day because they can’t afford health insurance,” Elouise Cobell said over the phone in mid-January from Washington, DC, as she prepared to testify against Interior Secretary Gale Norton in a contempt trial.

Cobell’s words evoke an image of reservation life all too familiar to our jaundiced eyes. Many of us tend to think of it as a historical injustice: Native lands stolen by colonizers, Native peoples relegated to marginalized poverty despite the rich resources on their lands. When she was treasurer of the Blackfeet Nation in the late 1970s, Cobell saw this dynamic in action: She knew that some of these desperately poor people lived on, and owned, lands with oil wells, grazing rights and timber sales that should be generating substantial income. Yet the accounting records sent her by the Bureau of Indian Affairs, which manages the funds in trust, made no sense.

The trust was set up in 1887, when Native people were judged incompetent to manage the income from their lands. The Interior Department was charged with managing the lands while the Treasury Department would oversee the trust, invest the funds and compensate the lands’ owners. “In a way, the US government has been a real estate broker, buyer, bank and accounts-payable agent,” says Cassandra Sweet, a Seattle journalist who has written about Indian treaty rights issues.

What’s clear is that none of these functions were performed very well. “Probates were backed up, so people were dying before they got their inheritance,” says Cobell. One account worth $1 million was said to belong to a tribal member whose address Interior had never updated. Meanwhile, “one woman I know has seven oil wells on her property, and she gets about $1,000 a year.” In 1996 Cobell met with then-Interior Secretary Bruce Babbitt and Attorney General Janet Reno to ask why the accounts being managed for Blackfeet members were in such disarray; when Washington brushed aside her complaints, Cobell went home and filed a lawsuit.

Cobell’s suit, a class action now representing nearly half a million Indians from dozens of tribes, made two demands. One, that the trust system be fixed–that is, made transparent and be required to operate according to generally accepted banking principles. Two, that a historical accounting be made of the money lost over the trust’s 110-year life.

Trial number one, to fix the system, has revealed a record that dwarfs Enron both in the level of corruption and the amount of money involved, with an estimated $100 billion loss over the century-plus life of the trust. The means were breathtakingly simple: Funds from the lands managed by the trust were dumped into Treasury’s general fund, using an accounting code not unique to those properties, and thus turned into a slush fund that was apparently used to bail out Chrysler and New York City during its fiscal crisis in the 1970s, among other purposes over the course of the past century.

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“I’ve never seen more egregious misconduct by the federal government,” said Judge Royce C. Lamberth in his decision for the plaintiffs in early 1999. In November 1996 it became clear that key documents were missing in five Federal Reserve offices. The Clinton Administration waited two years to produce the rest, leading to contempt citations against both Babbitt and Treasury Secretary Robert Rubin–and shortly afterward, Interior admitted destroying 162 boxes of documents.

Lamberth then appointed both a special master, Alan Balaran, and a court monitor, Joseph Kieffer, to track the government’s cooperation. Over and over again, Interior and Treasury have claimed to be fixing the problems with the system only to have Balaran and Kieffer come forward to say that they’d barely begun, Kieffer using phrases like “government malfeasance” to describe what he’d found.

The US Court of Appeals for the DC Circuit turned down the government’s appeal in February 2001. The Bush Administration neither appealed to the Supreme Court nor offered to settle the case, instead pledging yet again to make it right, this time with a new, supposedly state-of-the-art computer system to keep Native funds secure. Late last year, Norton proposed an entirely new bureau, which would transfer the funds from individual accounts to tribal ones–something opposed by an end-of-year congress of seven tribes in Spokane.

Meanwhile, in a twenty-first-century twist, a team of computer security experts hired by the court found the government’s supposedly cutting-edge computer system to be vulnerable to hackers. When ordered to make Indian funds secure, Interior decided to close all its Internet servers, including those of its popular websites, and also declined to send out its usual, if meager, year-end trust checks. In January Lamberth declared that the fragile and unreliable computer system was by itself grounds for a contempt citation.

What do Cobell and her lawyers want? For starters, a night or two in jail for Norton, “to get her attention.” More broadly, the demand is for the trust funds to be placed into receivership with some neutral financial institution, until it functions under generally accepted fiduciary principles. Native American banking systems have grown more and more sophisticated, with a late-2001 merger creating the Native American National Bank. Under the leadership of people like Cobell, they’re savvy about what’s being done with their money. They’re demanding a neutral arbiter, not Norton’s proposed bureau, which would, according to Cobell, “just move some of the same bureaucrats into another division.”

Even the right-wing Washington Times says simply, “The mystery is why Mrs. Norton, or the folks in the West Wing, don’t just settle the case once and for all.” If they don’t, and soon, not only will Norton and her deputy Neal McCaleb be at risk of jail time or fines (which Lamberth has said will be paid out of their pockets and not government coffers), but the stage will be set this summer for trial number two, on the issue of historical accounting. Such a trial will use whatever information is available–in the absence of papers that Treasury and Interior have destroyed–to determine fair compensation for the years of mismanagement. The proceedings could drag on for years.

While settlement is debated, Interior needs to pay out the year-end checks it still hasn’t cut to those who have depended on that money, and stop using access to its website as leverage for leniency in the case. It’s just started doing the latter, only after recent prodding from CNN and the Washington Post, but those checks are still nowhere to be seen. And even those initial good-faith gestures would not come close to delivering what the half-million people Cobell represents actually deserve.

Chris LombardiChris Lombardi, a New York-based freelance writer, also writes for
Women's E-News (www.womensenews.org), as well as Ms.,
The Progressive and the Village Voice.